Correlation Between Travelers Companies and Innovator
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Innovator at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Travelers Companies and Innovator into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Travelers Companies and Innovator SP 500, you can compare the effects of market volatilities on Travelers Companies and Innovator and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Travelers Companies with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Innovator.
Diversification Opportunities for Travelers Companies and Innovator
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Travelers and Innovator is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Innovator SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP 500 and Travelers Companies is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Travelers Companies are associated (or correlated) with Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator SP 500 has no effect on the direction of Travelers Companies i.e., Travelers Companies and Innovator go up and down completely randomly.
Pair Corralation between Travelers Companies and Innovator
Considering the 90-day investment horizon The Travelers Companies is expected to generate 4.39 times more return on investment than Innovator. However, Travelers Companies is 4.39 times more volatile than Innovator SP 500. It trades about 0.13 of its potential returns per unit of risk. Innovator SP 500 is currently generating about 0.14 per unit of risk. If you would invest 20,839 in The Travelers Companies on August 31, 2024 and sell it today you would earn a total of 5,765 from holding The Travelers Companies or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Travelers Companies vs. Innovator SP 500
Performance |
| Timeline |
| The Travelers Companies |
| Innovator SP 500 |
Travelers Companies and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travelers Companies and Innovator
The main advantage of trading using opposite Travelers Companies and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Innovator can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Innovator will offset losses from the drop in Innovator's long position.| Travelers Companies vs. Progressive Corp | Travelers Companies vs. Chubb | Travelers Companies vs. The Allstate | Travelers Companies vs. CNA Financial |
| Innovator vs. Innovator ETFs Trust | Innovator vs. First Trust Cboe | Innovator vs. Innovator SP 500 | Innovator vs. Innovator SP 500 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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